What type of money does europe use

This means that things can get a little confusing when it comes to money matters. The currency used in the majority of Europe is known as the euro.

The euro was first launched in , and aimed to unify countries in the European Union both monetarily and economically. The second phase of the euro occurred in , where euro coins and banknotes were created and distributed. This meant that currencies such as French francs, Italian lira, Deutsche marks, and Dutch guilders were phased out. You will need to have euros on hand if you are traveling to one of the many countries in Europe which use the euro as legal tender.

In total, there are 19 EU member countries who have adopted the Euro as their official currency. Denominations of Euro Euros come in both banknotes and coins. Within three years, however, the euro was established as an everyday currency and replaced the domestic currencies of many member states. The euro is still not universally adopted by all the EU members as the main currency. However, many of the holdouts peg their currencies to it in some way.

Given the enormous influence of the euro currency on the global economy, it is useful to look closely at its advantages and disadvantages.

However, the euro's considerable flaws became more apparent when it was tested by a series of challenges early in the 21st century. The main benefits of the euro are related to increased trade. Travel was made easier by removing the need for exchanging money. More importantly, the currency risks were eliminated from European trade. With the euro, European businesses can easily lock in the best prices from suppliers in other eurozone countries.

That makes prices transparent and increases the competition between firms in countries using the euro. Labor and goods can flow more easily across borders to where they are needed, making the whole union work more efficiently.

The euro also supports cross-border investments within the eurozone. Investors in countries using foreign currencies face significant foreign exchange risk , which can lead to an inefficient allocation of capital. Although stocks also have exchange rate risks, the impact on bonds is far greater because of their lower volatility. The prices of most debt instruments are so stable that exchange rates influence returns far more than interest rates or credit quality.

As a result, foreign currency bonds have a poor risk-return profile for most investors. Before the euro, successful companies in countries with weak currencies still had to pay high interest rates. On the other hand, less efficient firms in nations with stable currencies enjoyed relatively low interest rates. The primary risk in lending across borders was the currency risk, instead of default risk.

With the euro, investors in low interest rate countries, such as Germany and the Netherlands, were able to lend money to firms in other eurozone countries without currency risk. In theory, the euro should help countries that adopt it to support each other during a crisis.

The currencies of countries with larger economies tend to be more stable because they can spread risk more effectively. For example, even a prosperous small Caribbean country can be devastated by a hurricane. On the other hand, the U.

As a result, the U. A lot of Australians travel to Europe every year, but you will probably find it is easier to exchange currency in the more popular cities such as Paris, Rome, Berlin or any other tourist hot spots. Both in Australia and in Europe, steer clear of exchanging currency at the airport. On both ends, the rates will be much worse than in the city centres.

To find the best places to buy EUR, you can read our guide here. This is a convenient way to buy currency but you need some time. You can choose where to pick the order up from, and in some instances can get home delivery.

When you order with Travelex, you can choose to order cash, a prepaid Travelex Money Card or both! This is the best way to get currency quickly. You will find them in major shopping centres and towns. Our tip, is that the exchange rates are better in your CBD than what you'd find further out.

Find the best currency exchange in your states CBD here. Most banks do exchange currency. Popular Courses. Table of Contents Expand. Drafting Monetary Policies. Handling Country-Specific Issues.

Lender of Last Resort. Inflation-Controlling Measures. Currency Devaluation. The Bottom Line. Key Takeaways There are 27 countries in the European Union, but 8 of them are not in the eurozone and therefore don't use the euro. The 8 countries choose to use their own currency as a way to maintain financial independence on certain key issues.

Those issues include setting monetary policy, dealing with issues specific to each country, handling national debt, modulating inflation, and choosing to devalue the currency in certain circumstances. Article Sources. Investopedia requires writers to use primary sources to support their work.

These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

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Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links. Learn About the European Sovereign Debt Crisis The European debt crisis refers to the struggle faced by Eurozone countries in paying off debts they had accumulated over decades.